Blog | Able Accountants Birmingham

We recently attended a half-day event aimed to show people some basic principles of running a business. This was primarily at those starting and running their own businesses and making them profitable enough to bring financial security and greater life flexibility.

There were a couple of case studies to do with property investment and then ecommerce selling on Amazon, two popular areas in today’s modern age.

We therefore thought it would be helpful to nail -down 10 key points from this to help anyone looking into such business ventures, whether on a full-time basis and giving up the day-job so to speak, or more as a hobby to begin an additional part-time income.

Before we get into these, two quick pointers as well. Firstly, we have also relied upon other general experience within this sector, although a lot of these were covered at the event.

And secondly, this is deliberately a more overall business more focused on business overall, rather than just on the financial and accounts side, although of course this will play a huge part in the process.

So here goes, 10 top business-tips to be aware of:

1. Fulfil Genuine Needs

The bottom-line for any business is that they are providing goods or services for customers that are genuinely of value to them.

Although this seems glaringly obvious, it can be easily missed in modern life and talk of bigger business plans and ideas. This must all boil down to adding value to people, that they acknowledge and are willing to make a payment for.

So get these quantified, and ensure that these are being easily met over and beyond them to have a fully satisfied customer or client.

2. Be Clear on Goals

There can be a lots of emphasis on business plans and goals, and being able to easily visualise what the end should be.

These not only need forming, but suitably broken down into realistic ones that can be achieved. So reaching so much turnover or profit or number of customers within a certain time frame for example.

3. Getting the Right Context

Business can take many forms in today’s this day and age, the typical one being your own business being worked on full- time, either individually or with others.

However, things can take a different shape, for example starting a small business at home based upon a new hobby, or even using such skills within a local community group or interest where the end-goal is not just making extra profit for the sake of it.

Even within direct employment, there can be room to apply business skills for benefits such as bonus schemes and promotions.

4. Starting Small and Quantifiable

This is really simple, and applicable in the majority of situations; just start any idea off small.

So keep costs down, even do a small prototype to get going, and simply track the results. If it’s a success, then you can then soon scale-up when you’re ready.

The opposite is going in all guns blazing with a large investment and hoping that it will work.

Going back to the first point of genuinely fulfilling customers’ needs, if this is happening then this start-small way is simply detailing how you do this in a less risky way.

5. Taking Manageable Steps

Looking at what you need to do in business can be daunting; so much to do, and so little time.

Well, just break things down to simple steps, and start taking them one at a time. As you look back weeks or months later you’ll then see that you’ve actually achieved a lot in the end.

Even if the future stuff can’t be quantified yet, don’t delay the initial steps to get going with.

6. Involving Other People

Of course you need to consider obvious people like staff, suppliers, and customers to make your business work, but also look at others as well.

So maybe it can be a family business involving even youth with smaller jobs to become more involved, and see if any other advisors can help shape things as well.

7. The 80/20 Principle

This is actually a general life principle anyway, but referred to in a business context.

In short, 20% of something will end up producing 80% of the results, and therefore this 20% part needing the focus in order to get the most productivity.

This might be concerning time, money, staff, or clients. Learn to sift down into the part that’s making most steps forward for you.

8. The Two Types of Leaders

There are a lot of resources about leadership, however one simple point is to spot the difference between a more visionary leader to a more operational leader.

So the first has the drive, passion, and end-goal in mind to get things going, often more of an entrepreneur.

This is different though to the person who can work out the practical logistics of how things run and more day-to-day people and business management.

It’s rare to find the same person doing both roles, so make sure you have the right roles allocated.

9. Giving it Away

This can seem strange at first, but then quite natural when you see it in action.

That’s giving something away to get something better back, along the lines of the old saying of what goes around comes around. This can be range from financial giving to charitable causes, to going the extra mile for people just for the sake if it.

10. Business Development

A final point is the whole business development, and getting new business.

Ideally this is a job in itself, whether that’s calling round people, marketing techniques, or general networking.

Therefore set specific resources and time aside to do this, however make sure it becomes a natural part of your business as it possibly can do.

Getting the Edge to Business

No matter what angle or business you’re coming from, whether a seasoned entrepreneur, or someone new just wanting to grow a small home-business; these top ten tips will help steer you in the right direction.

It’s essential to get these basic principles in place in order to have the best change for growth and profitability; once they are, then it’s only a matter of time before the pennies start rolling in.

The core summer and holiday season begins in July and ends at the end of August;, something that every one tends to look forward to as holidays draw near and hopefully some great weather to match it.

It's actually a time to get away from often the day-to-day routine of accounts and monies, whether your own personal finances or through a business and work interest.

However, just before you turn off your calculator and log out of your online bank accounts, here are a three general pointers to bear in mind, whatever interest and angle you're coming from:

1. Check if Money Will Still Come In

For those with a permanent and ongoing employment, then this is very straight forward of course; your weekly or monthly pay will still keep coming in, even though you may have many weeks on holiday, say, on the other side of the world.

However, those withll less stable income need to carefully plan for this, making sure they're clear on what work will actually be produced, and whether customers and clients will likewise be around to benefit from this.

Even if this is the case, then normally straight-forward tasks like paying invoices can be dragged out at this time of year, so check the reality of payments coming in and not just adding up on paper.

2. Monitor What Your True Expenditure Will Be

On a personal note, you may well be spending more at this time of year with holiday costs and simply spending more time at home in summer evenings and weekends.

Although, saying that, there may be other costs that actually reduce, for example heating and electricity costs when it's good and sunny weather conditions.

And linked to the previous point on income, check if there will be any additional costs as a result of this, for example staff may be on holiday andbut you need to arrange additional cover at an extra cost.

3. Plan For the Unexpected

And finally, just watch out for things being different over the summer, and any unexpected issues. This may be for example weather- related, or more people-related with different child arrangements out of school for example.

But also look at the positive side to things as well, as it's a great time to relax and plan for the next quarter or period from, say, September onwards when people tend to be back into the swing oif things.

Enjoy the Summer By Quickly Counting the Cost

So, as you embark on the summer period, then take into account these three simple angles for your personal or business finances in order to make sure that you control the money and it doesn't control you.

A quick look at what the true income and expenditure will be over this period, and any unexpected charges, can soon pay dividends both straight away and later on in the year.

You can then get on with whatever important summer plans you have arranged, and enjoy them.

For those with business premises, you can suddenly be hit with serious property costs within your accounts. Staff and HR costs tend to be the highest expenditure item with any business, but property ones come in a close second.

Larger businesses may well be in the know on this already, and have ways to correctly acknowledge this in their profit and loss, balance sheets, and other financial statements. Everything from correct accruals, to carefully balanced assets and liabilities, to fine-tuned costs from turnover.

Smaller businesses however often don’t have this luxury, and find themselves muddling through all these costs that keep mounting up. Suddenly the initial rent or purchase price was the easy part of the budget – what about all these other ones that keep cropping up?

Start-ups and thriving businesses are most at risk, as their focus during this growth phase is more on the bigger-picture issues rather than this sort of detail. Plus, they might be outgrowing premises soon anyway and so push the whole thing into the future.

Well don’t be fooled, these can be serious costs that can cripple any business. Even the well-versed bigger businesses need a little helping hand and reminder of the basics.

Therefore, here are 10 of the top money matters to be aware of with any property interest for a business. These are deliberately more general to understand the principle at hand rather than getting bogged down in how they are then correctly accounted for – that’s the job of a good accountant.

The focus of these tips is a small business with rented premises, whether a traditional letting of a warehouse or a slick serviced-office space. These therefore cover the nuts and bolts of such business property costs, yet are still applicable for all other types of business and for those owning their property.

So here goes; 10 top property pointers to be aware of:

1. Business Rates

This is a big cost that can be often forgotten when new to business lettings, or if you’re dealing with otherwise ‘all inclusive’ costs assuming that isn’t due directly when in actual fact it is.

It’s like what council tax is for people’s homes, a tax for occupying a business area payable to the local authority, with two important factors to consider.

Firstly, there can be all kinds of changes to make to these billed costs to reduce this liability. These range from a full-blown appeal of the main rateable value, to simply getting the start date correct.

There may also be forms of exceptions or reliefs available, for example periods of vacancy, and more importantly for a lot of businesses, small business rates relief which can process up to 100% reduction in this cost.

Secondly, the invoices are often generated on a whole year’s basis from April one year to March the next, whereas you can often agree a regular monthly payment-plan just like your council tax at home. This needs correctly agreeing and then accounting for in your books and cash-flow predictions.

2. Service Charges

These can be a mystery that again crop up without warning; an additional service charge that a landlord charges for maintaining any communal areas at a property.

So, there may be shared stairs or rear car park areas that need looking after and the costs apportioned between all the occupying tenants through this charge; you’ll see the same principle when you purchase a long leasehold interest of a flat in a residential block.

So firstly, double check whether you will receive this charge, if it does exist and whether it is agreed to be inclusive of the main rent possibly.

But then secondly, look at ways to getting this cost crystal-clear and as fixed as possible. So maybe a fixed-level through the years, or a top-level cap of costs, as you can get hit with sudden one-off costs like a new communal boiler or major redecoration cost.

They should have full annual accounts as well to clearly explain these and budget for the next year, although check that these are up to date and you don’t get any nasty balancing charges, particularly if you’re taking on an assignment of an existing lease interest.

3. Main Utilities

There’s the three main utilities that everyone will be aware of – water, electricity, and gas supply for any heating or cooking facilities.

Electricity is probably the guaranteed ones, as you may not have any gas supply, and any toilet or kitchen areas are shared and dealt with by others. But double-check these, and not only what is actually supplied but who (and when) gets charged.

Remember that these need to reflect actual use, so basing upon actual reads is important and seeing if any measures like LED lights are worth investing in to pay off with lower bills over time.

You may also be able to agree contracts for a year or two to benefit from beneficial rates and costs.

4. Extra Utilities

You then have three other extra utilities that reflect today’s modern world – phone lines, internet provision, and even aerial lines.

These can be combined to some degree, and of course the aerial ones for TV more applicable for homes however still possible in a business context.

So get to the bottom of what is already supplied, and what else you need. Any new connections can have serious delay on things and hefty one-off costs for installation and gaining consents, therefore look at any more out-the-box options as well such as mobile use for internet.

As with the main utilities, see what contracts and rates can be agreed, considering your true usage and adding into your budget figures.

5. Rent or Mortgage Payments

This will be your biggest expense and therefore top of your priority list. Even if you own the property with no rent and landlord to think of, remember any borrowing and mortgage costs as well.

However, two words of caution here to make sure you get these accurate.

Firstly, be sure about any changes to these levels over time, for example a rent review or adjusted rent. During the initial negotiations you may also be able to agree favourable rent discounts which is the norm with commercial property lettings, even if this is just for the initial fitting-out period. This could be a one-off rent free at the beginning or a slower reduced rent over time; see what works out best in your accounts and cash flow.

Secondly, understand the timing of these payments as they’re often not only in advance but up to 3 months in advance. That can be a lot of money to part with and worth carefully planning for in your cash flow predictions.

6. Building Repairs

Of course, properties do need some loving TLC as you’ll know from your own home. It may be a quick reactive repair of a leaking toilet, or more proactive redecoration and refurbishment.

Therefore plan this ahead of time, and when this all needs to happen, including any initial fit-out costs.

But then understand how this relates to your lease and landlord, and who forks out for the bill.

7. Beginning & End Costs

Make sure you know what extra costs you’re going to incur by moving into and then out of the property, as unfortunately this won’t magically happen cost-free.

On the repairing line above, there may be an initial fit-out or decoration cost to account for, and at the end a final dilapidations liability as you remove certain items and make good the property (often a more onerous obligation than when you just rent a residential property short term).

Or even the simple moving costs can be a big surprise, from the removal van, to people’s time spent on, to additional packaging and refuse removal. It all adds up.

8. Additional Charges

Think of any additional charges you may incur over time at the property, particularly as part of the operation of your business.

Examples include any additional car parking, and ability to use and hire extra spaces like meeting rooms and storage areas.

Even more non-property costs may be there but linked to you using this new property, for example virtual secretarial and office duties.

9. Fees & Advice

Let’s not forget all the different areas of expertise and professional advice you might incur, the two obvious ones being your accountant and solicitors when it comes to the legal documentation.

Property surveyors and valuers may also be required, not only at the beginning but if you need to process any formal requests for, say, landlord’s permission on anything during your occupation.

10. Deposits

And a final point is a deposit, not an automatic thing as with residential lets, but they can be a hefty bill when they are needed.

In actual fact, even though you may not automatically need them, you may choose to offer them with situations of a poor covenant-strength of your business and not wanting guarantors.

When you do need them, in principle you should get the money back at some point in the future, so account for them correctly.

Don’t Let Property Costs Come Tumbling Down on Your Business

Whether you’re a direct business owner and employee, or an external advisor, being able to get to grip with the true and longer-term property costs of any business is critical. Failing this, you risk crazy costs spiralling out of control and sucking any form of profit out of the business.

Therefore, these top ten points will help you take a step back and know the basics. Even if these are already known, then a reminder will still help to make sure they’re correctly accounted for and planned in the future.

Here in May we have the benefit of not just one but two bank holiday Mondays, the most in any month during the year.

From a personal perspective this is great news – two longer weekends, and then shorter working weeks afterwards. And to top things off even more, this last one was great weather.

However, from a business perspective this can cause issues. And when you see the knock-on effect in your accounts and finances you can suddenly start feeling the pinch and bank-holiday blues.

Getting on Top of Bank Holidays

Therefore, here are a few pointers to help reduce the impact by seeing what to look out for and planning accordingly.

Whether you’re involved with the issues of running a large company, or you’re simply planning your own schedule, these pointers will certainly help you get the most out these forthcoming bank holiday weekends.

1. Salaries & Sickness

For those on fixed salaries, it’s nice to have the same level of expenditure as any other month, although in context of less productivity then this is technically at a loss.

Although, saying that, there is an argument that that people will be more refreshed from these breaks and so more productive when back at work – erm, not sure if this happens in reality though.

In actual fact, just watch out for sicknesses cropping in as well, whether genuine cases after people have been on holiday, or possibly more contrived and people wanting time off on the previous Friday or following Tuesday to benefit from the good weather.

For those on more flexible day-rate salaries, these should be less of an outgoing if they’re not working, although be careful they don’t increase if you need to bring in extra help or higher rates.

Other overheads can still be ticking away, for example property costs, however there will be some that won’t necessarily be as large due to less use in this month, for example reduced utility usage if people are not at the workplace.

2. Turnover & Income

As mentioned above, there is bound to be less turnover and sales with simply less working hours, although this all depends upon the type of business you’re running.

So an ice-cream van business this last bank holiday will have sales through the roof with both a bank holiday with people off, and such great weather.

And watch out for any turnover changes just before and after each holiday, so, sudden orders just before, and a slower response possibly afterwards.

3. Delays & Duties

And finally, just watch out for different speeds of working during and either side of the bank holidays.

So, traffic could be manic and slow things down, although can be better on, say, the following Tuesday when people are not all back at work, particularly with this forthcoming one with a lot of half-term holidays for schools.

Plus, we’re all human, and people will need wind-down and wind-up time either side of such holidays which may also affect the productivity-purse of the business.

No More Bank Holiday Blues

So, these above pointers can help you be ahead of the bank-holiday game and make sure they don’t spoil your business and finances whilst you enjoy the extra break.

And although we’re one-down already for May, there’s still time to plan for the one at the end of May and then others later on in the year as well.

Helping charities and voluntary groups set-up account systems and manage finances has great rewards. Being able to help those to then help others is so evident in these circumstances.

Often budgets are tight and resources limited, and therefore any kind of valuable input can be truly appreciated. And often it doesn't take too much to maintain going forward, once you have the right system and procedures in place. Then you can basically free up others to then get on with what they need to do.

Top Financial Issues to Consider

Therefore here are top tips to consider, whether you're a trustee or leader directly involved, a volunteer becoming more involved with administration and financial matters, or an external advisor helping out.

These aren't exhaustive at all, and only a quick overview. This is deliberate in order to help you start seeing the kind of issues you need to consider and not be tunnel-visioned; you can then delve into the detail as and when required.

1. A Basic Cash Policy

You'll probably need a form of policy on how you deal with cash for the organisation, particularly actual cash that could be potentially misused by people. Not only is the value of the money at stake, but people's own safety managing it as well.

You'll find a lot of standard policies around, but they will need tailoring to the actual circumstances, for example talking it through with the main managers and risk assessors.

Then have a final version ready to circulate to people, ideally dated so it can be easy to then spot if newer updates are needed in the future.

And as an aside, make sure this is aligned with any other important organisational policies and legal documents, for example the trust deed for charities.

2. Considering Data Protection

With money and finances often comes people's personal data, whether that's bank and credit-card details, or additional contact and gift-aid details as well.

This may also be across different systems and packages that all need to be looked into and see how they all link to each other.

Therefore consider the information around finances with the data-protection policy as to how it is stored, managed, and deleted in the future.

3. Basic Invoices and Receipts

These of course are the bread-and-butter for each penny spent and received, and are important for the books. Within business they're par for the course, but in the voluntary sector not so clear.

Individuals may forget or not understand what’s needed, therefore spell this out in terms of what's needed, who to hand them to, whether digital or paper copies are needed, and that all are important to communicate.

4. Checking People Out

Other checks such as DBS, references and validation, and identity checks, can still be applicable for those involved with finances, as they're in a position of trust and authority.

So even someone just helping to cash-up at the end of an event may need these types of checks, with particular emphasis on any financial issues.

5. Multiple People

As a rule of thumb, don't let people be alone with money.

This is in a literal sense, so when counting up cash, doing it in pairs for example, and making sure there is no outside connection, for example married couples.

This can also work more remotely, so other signatories for cheques and online access and authority for banking transactions.

6. Keeping Safe

Also linked with data protection above, although more on literally keeping financial things safe and sound. So whether that's cash being taken, bank statements and documents, or credit cards and machine.

Make sure they’re locked out of view, with authorised people being able to access, check, and move these.

Also, remember this counts for people's own finances and items, for example how they store any personal handbags or items whilst on the premises to reduce the risk of these being taken by others.

7. Insurance

As parts of any general organisational policy you can ensure infidelity cover for loss of goods and money, particularly important for when you're holding cash and actual monies and covering this being stolen.

Also, Directors & Officers cover will generally cover any individuals within their capacities such as Directors and trustees.

8. External Accountants

We’re not just saying this because of who we are, but as a genuine point to consider. There will be a size and nature of the organisation’s accounts that will require such input anyway through, say, an external audit, but from experience even bringing in an external and reputable accountant before then can help ensure that finances are being correctly managed.

Even if this is just a final sanity-check of things, this can go a long way.

Also, on the subject of accounts, remember to have these available for people to see if required with additional helpful breakdowns and summaries. Entities like charities need these anyway and will be available to the public online, but others will benefit as well with this degree of transparency.

9. Gift Aid

For registered charities this is a must to look into, where individual donations from those who pay personal tax means you can reclaim this back to the charity's benefit.

A serious source of additional income, and therefore careful planning is needed to get the correct information from people and process with HMRC.

10. Ways to Donate

On the subject of donations, it's worth thinking through how you practically do and manage this. It needs to be both compliant but easily usable by people.

If you're taking cash or cheques from people, the safe way of noting this alongside any gift aid requirements is important.

If more online banking and payments, then make sure details are easily received, payments can be linked to actual people if needed, and just watch out for any external websites dealing with these and what fees they take for the service.

11. Points of Contact

It sound obvious, but just establishing and communicating these is important to know who needs to contact who for what purpose.

This may need other layers of contacts as well, for example through a complaints procedure, lone worker contacts, and volunteers having a clear point of contact for accounting issues.

12. Expenses

This needs a clear policy on what is and is not allowed, and how this is processed. So look at what items are allowed, what levels are required before external approval is needed, and practically what invoices are kept and communicated.

13. Petty Cash

It's like marmite, you either love or hate this principle of having a locked-box of cash that people can use for small items and then invoices being kept to support this.

On one side it can be very practical from a user’s perspective, but from an accounting perspective people prefer just the straight payment of invoices.

If you do have it, then think through how it is done successfully.

14. Bank Accounts & Processes

Make sure you have just the right bank accounts set up that can handle what the voluntary orgnaisation needs.

So even the number of accounts is helpful, maybe just one current one and one savings, particularly for, say, charities who may need to have set-aside reserves and savings. Although it's maybe good to have more than one, don't overcomplicate with more than what's actually needed.

Then see what services the bank can provide, right from processing payments, to fees and costs, to customer service. Try and go through with a business manager, as although this isn't a mainstream business interest it will still need business facilities from a banking perspective.

Also, if you take a lots of cash just check that they will accept these being deposited at the local branch, and what cash-bags and procedures are needed for this.

15. Handling Payments

Actual processing of payments to people and receiving income from people is of course key, and the right person is needed, whether a formal treasurer or book keeper. However, often it does all lie with one person, but make sure others are involved at least from a compliance perspective even if they're not doing the main day-to-day duties.

So maybe there is a second signatory on cheques, or multiple people have online access to the accounts.

Helping Others Then Help Others

Whatever capacity you’re in with a charity of voluntary group, these above factors are the sort of things you need to consider in order to help firm-up the finances and accounting procedures.

Remember that you're not there to do this for the sake of it, and of course there will be separate advisors to correctly set-up individual aspects, but these will certainly help you focus in on the sort of overall issue to bear in mind.